Performance Management Success

Craig Schiff lets Business Management in on the secrets learned from the 2007 BPM Pulse Survey.

“BPM is not just about technology. It needs to be about your business and your strategy”

The BPM Partners’ 2007 Business Performance Management (BPM) Pulse Survey wrapped up in February. Over 500 respondents from companies large and small, across many industries and continents, took the time to share their thoughts. The respondents came in roughly equal measure from the finance department, IT and other business units throughout the company. They answered questions about their status and plans regarding budgeting, strategic planning, consolidation and reporting, scorecards and dashboards, and operational analysis. Correlations between responses to several questions has proven to be one of the more meaningful ways to analyze this data.

For this article we examined the correlation between the respondents’ overall satisfaction with their BPM project and several underlying factors that might impact that satisfaction.

One key question asked users to rate their experience with BPM to date. The largest group (43 percent) said the project met their expectations. The next largest group said it was too early to tell. The groups we found most interesting are those at the extremes: the 16 percent that said the project exceeded their expectations and the 13 percent that felt their BPM project fell short of expectations. Looking at how these groups differed from the norm in their responses to other questions can provide an insight into some of the factors that contribute to success (or failure).

Business performance management is a broad term covering several areas. The survey asked respondents to identify the key areas of BPM they were focused on. While budgeting and forecasting was the area receiving the highest response from all groups across the satisfaction spectrum, there was significant variance by level of satisfaction. Specifically, the most satisfied group (‘exceeded expectations’) had a higher concentration (by seven percentage points) of budgeting/forecasting initiatives than the ‘met expectations’ group. There could be a number of reasons for this. One possible explanation is that the move from a chaotic spreadsheet-based budgeting system to a real BPM budgeting system provides very significant and noticeable improvement. Another possible reason for higher satisfaction in the budgeting area could be that budgeting is one of the more developed components of BPM. Many vendors have gone through several iterations of development with their budgeting modules that results in deeper, more robust functionality and higher quality. Some of the other areas of BPM such as performance dashboards and operational analytics are earlier in their development lifecycles.

When looking at the least satisfied group (‘fell short of expectations’) we found that they had a greater concentration in two BPM areas than either the met expectations group or the total. Specifically, they were nine percentage points higher in their focus on dashboards and 12 points higher in operational analytics than the met expectations group. This is consistent with our earlier comment about these areas being less developed. In the case of operational analytics, there are many tools in the market today but few pre-built applications. This forces companies to supply much of the domain expertise themselves. In the case of dashboards, the problem is less about the technology and more about the information displayed on those dashboards. Many companies forget to take the necessary step back to revisit their strategy, determine their goals and objectives, and develop key measures of successful execution. So, instead of a dashboard populated with a handful of key performance indicators (KPIs), you have a dashboard displaying the same basic financial ratios that have been viewed in hardcopy form for years. Not much of a move forward really.

Another area where the most and least happy BPM users differed noticeably was in their choice of software provider type. In the survey, users were asked to note which category best describes their software vendor: ERP provider, packaged application vendor, tools vendor, or vendor of tools and applications. In the overall results, the majority preferred a vendor of both tools and applications. It seems logical – the packaged application offering enables you to avoid having to reinvent the wheel and accelerates time to payback. The tools part of the solution set enables further customization and expansion. However, in the survey results the happiest group preferred pure application vendors over any other category. This may be due to the ease-of-use focus of these companies. The application vendors design their solutions for business end-user self-sufficiency and hide much of the deep technology aspects. If they don’t also bundle in business intelligence tools, you may lose some additional flexibility but you also reduce complexity. While the least happy group mirrored the total group in their order of vendor preference, they were 4-5 percentage points higher than either the ‘met’ or ‘exceeded expectations’ groups who identified ERP providers as their vendor. Although ERP providers offer excellent data integration between their transactional and BPM systems, business end-users generally find them more difficult to use and less feature rich than the offerings of BPM-focused vendors.

The last area we looked at was software expenditures. If you believe the old adage ‘you get what you pay for’, you would expect that the more money spent on a software project the more satisfying the end result. That was not the case. The clearest distinction was in the category of companies that spent over $1 million on software. While the total group and the ‘met expectations’ group had 12 percent of respondents fall into this category, the ‘exceeded expectations’ group had five percent. The ‘fell short of expectations’ group had a whopping 24 percent of respondents spending over $1 million on software. It could be that when you spend that much you expect more.

In the end, success really comes down to the basics. You need to determine your detailed requirements. You need to perform the appropriate level of due diligence and find the vendor that is the best fit for your business needs. It’s likely that some of the respondents who spent over $1 million and were not happy shortcut the process and went with a large (and costly) vendor that seemed low-risk. You also need to make sure that BPM is not just about technology. It needs to be about your business and your strategy. The majority of BPM users are very happy. If you follow the simple steps to success outlined here, you can increase the likelihood of joining their ranks.

BPM goes largeThe 2007 BPM Pulse Survey results indicate that nearly 70 percent of respondents have turned to business performance management as part of a larger project of corporate system consolidation or standardization. “Not only is BPM continuing to be a strategic initiative, but it is also part of a larger plan to consolidate systems and work towards that elusive ‘single version of the truth’,” explains Schiff. “These findings indicate that business performance management will continue to evolve from a finance-driven activity to one that is part of an overall goal for better control, transparency and management of the business as a whole.”

Career path
Craig Schiff is CEO of BPM Partners, a privately held professional services firm that focuses on management and strategy for BPM initiatives. A pioneer in business performance management, Schiff helped create and define the space known first as analytic applications, then business intelligence and now BPM. He has published several articles, spoken at numerous BPM conferences and is a recipient of the prestigious Ernst & Young Entrepreneur of the Year award.

BPM Partners is the leading independent authority on business performance management solutions and a founding member of the BPM Standards Group. BPM Partners’ vendor-neutral consultants guide companies through their BPM initiatives from start to finish, helping companies attain the maximum value from their business performance management initiatives. This is done through hands-on services that provide insight on how to collect and analyze the right information to address specific business goals.